Thursday's arrest was borne out of frustration with the government's inaction over UberX and its drivers skirting the law, Mr Howarth said.

Uber claims that its low-cost UberX service will offer customers up to a 20 per cent discount on standard hire car fees. is in breach of the passenger transport act. The maximum penalty is a $110,000 fine.

The NSW Minister for Transport, Gladys Berejiklian, warned that hire car drivers who were not licensed appropriately would face the consequences.

"It is currently illegal for drivers in NSW to participate in what we call 'ride-sharing' activities like UberX," she said.

"The Roads and Maritime Service has already issued several fines of thousands of dollars for those breaking the law.

"My main concern at this stage is the safety of customers."

Mr Howarth said that he had now started a national campaign, and that he had "hundreds of licensed hire car drivers ready to enforce citizen's arrests of UberX drivers".

The Taxi Council of NSW said that it did not condone any citizen's arrests, but that it did have concerns over Uber's business model.

Uber has not responded to requests for comment about the legality of their operations.